Network dynamics could push Ether above $5,000

Live discussion on market outlook

According to the weekly report:

The demand for the Ethereum network is rebounding, with increased network activity. Valuation indicators suggest that if the supply-demand dynamics continue, the trading price of the second-largest cryptocurrency could exceed $5,000.

As of the time of writing, the asset is valued at $3,910. The average purchase price of ETH for holders is $5,200, marking the peak of the 2021 bull market, but as new participants buy at higher valuations, the price range will continue to rise.

The recovery in ETH demand is reflected in the holdings of spot Ethereum ETFs, which have reached a new high of 3.41 million. Since its launch in July 2024, the holdings have significantly increased, rebounding sharply from a low of 2.716 million in September. Continued buying pressure from Ethereum ETFs could drive the price higher.

Supply dynamics send positive signals:

Since the implementation of the EIP-1559 upgrade, Ethereum's supply dynamics have shown positive growth, allowing for the burning of a portion of transaction fees and reducing net issuance.

The Dencun upgrade has increased ETH's total supply to its highest level since April 2023, but starting in September, the amount of ETH burned through fees has increased, causing the rate of supply growth to slow, bringing deflationary pressure to the asset.

Additionally, Ethereum network activity has increased, with total transaction volume and contract call volume reaching new highs in 2024. Daily transaction volumes hover around 6.5 million to 7.5 million, up from 5 million last year; daily contract call volumes expanded from 5 million in 2023 to 7 million.

The more network activity there is, the more ETH is consumed through transaction fees, positively impacting cryptocurrency prices.

Live discussion on market outlook